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16ECONOMIC SCIENCES
FEATURES OF FORMATION AND USE OF FINANCIAL RESOURCES BY HOUSEHOLDS IN
UKRAINE
Varchenko O.
Doctor of Economics, Professor Chernysh Yu.
Master of economics Bila Tserkva National Agrarian University
Abstract
The article analyzes the essence of financial behavior of households and its components. The dynamics and structure of household finances in Ukraine for 2015-2019 are studied. The general tendencies of aggregate resources of Ukraine households are characterized. It is determined that in Ukraine in the total resources of the population the largest share is occupied by wages. The essence and the most important components of financial behavior of households are substantiated. The main problems that hinder the development of active strategies of financial behavior of households in Ukraine are identified, and possible ways to solve them in modern conditions are highlighted.
It is proved that there is a need to create favorable conditions for the formation of savings and investment financial behavior based on the implementation of a set of measures, among which an important place is given to financial literacy of the population.
Keywords: households, financial behavior, financial resources, savings, expenses, income.
Relevance of research. The study of financial behavior of the population is one of the most popular areas of economic research. Increased interest in it is due to the fact that the process of market relations has led to increased social stratification of society in terms of welfare and high level of income differentiation, created the preconditions for the formation of the financial market, the emergence of various financial instruments available to the population. Traditionally, the strategies of consumption, savings, loans in neoclassical theory were considered through the prism of individual decisions, based on its benefits and utility functions. In the current conditions, in order to explain economic financial decisions, it is theoretically more reasonable to analyze the behavior of households. Economic and financial decisions made by households are influenced by socio-demographic, educational and other characteristics, phases of macroeconomic cycles that form different trajectories of its behavior.
Global financial crises, accompanied by price volatility and resource and currency markets, have a negative impact on the material well-being of the population and exacerbate inequalities. The phenomenon of income inequality and its various consequences for society is most often viewed from the standpoint of its impact on economic growth, poverty and social tensions. Obviously, the inequality of members of society is not limited to inequality in per capita income, but monetary income determines the standard of living of people, the motivation of their activities. Elimination of inequality in the welfare of the population is the main goal of socio-economic policy of the state. However, directly the citizens of the country in the process of life form strategies of economic and financial behavior, which contribute to improving the level and quality of life, so the study of various aspects of financial behavior of households,
identifying the mechanism of their strategy is an important area of research.
The purpose of the study is to systematize and generalize on the basis of a critical qualitative analysis of theoretical and empirical studies of financial behavior and financial strategies of the population of Ukraine and to clarify the concept of financial behavior at the macro level.
Materials and methods. Methods of economic and statistical analysis, modern methods of estimation and decomposition of inequality by sources of income (expenses) and by groups of the population were used as the instrumental and methodical apparatus of the research, which provided a sufficient level of substantiation of conclusions and obtained results. The information and empirical basis of the study was to open statistical data of the State Statistics Service of Ukraine.
Results of the research. In the structure of financial behavior of households, the most studied components are the issues of consumption, savings and investment in terms of distribution of savings between different financial and tangible assets. Researchers divide the evolution of economic views on the savings and investment behavior of households into four main stages: savings are considered as functions of the interest rate (early twentieth century); Savings are considered as a function of income: J. Keynes's theory of absolute income, as well as the works of Kuznets S., Samuelson P., Lew T. and Chang K., and others. (193050); neoclassical theories of savings: the theory of permanent income of M. Friedman and the hypothesis of the life cycle of F. Modigliani and R. Bramberg (1950-1980); modern stage of improvement and complication of neoclassical theory: Deaton A. and Paxon, Hall R., Shorrox A. and others. The presence of a significant number of different theories indicates the complexity of research in the field of theory and
methodology of such a multifaceted phenomenon as financial behavior.
Under financial behavior, we consider the purposeful activities of households or individuals, focused on attracting the use of financial resources, which involves the choice of alternatives based on utility under the influence of psychological (rationality) of the subject, risk appetite, monetary attitudes), social (trust) financial institutions, generally accepted standards (stereotypes) of financial behavior, the level of financial culture in the country, consumer expectations) and economic (level of financial literacy, past experience of interaction with elements of financial infrastructure, level of economic activity) factors.
Possible options for financial behavior of households are formed in the form of strategies, which are a stable set of actions that are implemented in the management of cash flows, aimed at obtaining the expected result with the existing budget constraints. The strategy of financial behavior is the result of joint choice by household members or its head of certain actions based on value orientations and depends on the existing conditions of the external security environment, the level of social and political tension in society, etc.) and internal preconditions. it, its structure and sources, the number of children in the family, etc.) on the other. The variability of financial behavior of households is determined by the relationship of different types of financial strategies (consumer, savings, credit, insurance, investment, charity) in order to achieve the set, including long-term goals for the efficient use of available financial resources.
The basis for the formation of indicators of financial behavior of households is statistical observation. Most theories of financial behavior, the laws of which have been verified and confirmed empirically, are based on the results of statistical observations. These include the classic works of J. Keynes, M. Friedman, F. Modigliani and others. They believed that statistics is the best basis for economic modeling, as it brings economics closer to the natural sciences, where conclusions are made based on observations of the behavior of the object of study and predict its behavior based on analysis of mass phenomena and processes [1]. However, in order to use the methods and techniques of statistical methodology
Distribution of the population by the
income per
to verify the theoretical generalizations of various aspects of financial behavior, it is necessary to have access to available relevant information that will allow to draw sound conclusions.
From the macroeconomic approach, household income reflects the set of economic relations through which the newly created value in society is distributed among the owners of factors of production, as well as the redistribution of primary income to optimize final consumption of goods and services within society. From the micro level, household income is a set of income over a period of time from all possible sources (both monetary and non-monetary), which increase the assets of the household and can be consumed without reducing the real value of its property [2, p.175].
It should be noted that in Ukraine the situation with the formation of sufficient financial resources in households to meet their own needs of consumer and non-consumer nature is ambiguous. According to researchers, cyclical fluctuations in socio-economic development make adjustments in the formation of labor income, the creation of certain savings and their investment in the economy. [3]. Obviously, in the case of stabilization of the economic situation in the country, growth of business activity and accumulation of significant funds of financial resources, there is an increase in household participation in investment processes, so the most favorable in this context is to ensure permanent growth of real incomes. , increasing the level of GDP and the practical implementation of the projected situation in the country.
The financial resources of households are one of the most important indicators of the welfare of society, the level of social and economic development of the state. The main part of the financial resources of households is formed with the help of cash income. Therefore, to measure the living standards of the population, it is necessary to first analyze the structure of their income in modern conditions.
It is established that the average size of households decreased in 2016, and remained unchanged for the last 4 years. During the study period, households of 2 people and without children predominated. Among households with children, households with 1 child accounted for the largest share. In general, in Ukraine, the distribution of the population by the level of per capita income is presented in Table 1.
Table 1
level of average per capita equivalents
month, UAH_
2015
2016
2017
2018
2019
by 3000,0
80,2
64,4
36,6
20,9
10,7
3000,1-4000,0
19,8
35,6
30,8
27,3
19,2
4000,1-5000,0
17,8
22,8
20,6
5000,1-6000,0
14,8
29,0
16,6
6000,1-7000,0
10,4
7000,1-8000,0
7,9
8000,1-9000,0
4,6
9000,1-10000,0
3,2
10000,1-11000,0
2,3
11000,1-12000,0
1,5
over 12000,0
3,0
Source: calculated according to [4]
The data in Table 1 show that in 2017-2018 there was a general increase in per capita income, and in 2019 the largest share of the population had an income of 45 thousand UAH. per month.
A decrease in the share of households with per capita equivalent total income per month below the subsistence level has been established. In addition, in 2018-2019 the value of the quintile coefficient of differentiation of total incomes increased, ie the ratio of the minimum income level among the wealthiest 20% of the population to the maximum income level among the least well-off 20% of the population ranked by per capita equivalent income increased. Also in 2019, there
Structure of total resources of hoi
was an increase in the quintile ratio of funds (total income), which indicates an increase in the ratio of total income of the most and least well-off 20% of the population, ranked by the average per capita equivalent income.
In 2019, a sharp decline in financial savings of households was established, which continues in the future due to a significant increase in consumer spending, and in 2019 they exceeded income, which makes it impossible for households to make financial savings. In general, it is the largest in the structure of total household income the share belongs to income from wages (Table 2).
Table 2
¡holds of Ukraine in 2015-2019,%
Indexes 2015 2016 2017 2018 2019
Aggregate resources on average per month per household, UAH 5231,7 6238,8 8165,2 9904,1 12118,5
Structure of total household resources %
Cash income 89,4 86,0 87,5 89,9 92,0
Pay 47,2 46,7 52,4 54,5 57,3
income from entrepreneurial activity and self-employment 5,5 5,2 4,4 6,0 6,5
income from the sale of agricultural products 3,4 2,9 3,0 2,5 2,4
pensions, scholarships, social cash benefits 25,2 23,1 20,2 19,9 19,2
cash benefits from relatives, other persons and other cash income 8,1 8,1 7,5 7,0 6,6
The cost of consumed products obtained from personal farms and from self-procurement 5,1 4,8 4,0 3,8 3,6
Non-cash benefits and subsidies for housing and communal services, electricity, fuel 1,3 4,7 4,7 2,8 0,7
Non-cash benefits for the payment of goods and services for health care, travel services, vouchers for recreation centers, etc., to pay for transport and communication services 0,4 0,4 0,4 0,4 0,4
Other receipts 3,8 4,1 3,4 3,1 3,3
Reference: total income, UAH 5122,0 6095,0 8013,1 9720,2 11859,8
Source: calculated according to [4]
The data in Table 2 show that a significant share of household cash income is accounted for by pensions, scholarships, and social benefits provided in cash. In general, in 2019, more than 55% of households received social assistance, which confirms the role of social assistance in the formation of household income in Ukraine. In the general structure of expenditures of Ukrainian households in 2019, most funds are spent on food and non-alcoholic beverages (46.6%), and a significant share of expenditures falls on non-food goods and services (41.5%). Thus, the results of the analysis show an increase in both household income and expenditure, but a significant decrease in the level of financial savings of households is negative.
It should be noted that in 2020 the situation with household incomes, as already mentioned, significantly deteriorated due to Covid-19, and although the situation improved in July-August, the results of 2020 are preliminary, especially given the negative forecasts of the pandemic. Thus, the deterioration of household finances in Ukraine in 2020 is caused by the consequences of the pandemic and, above all, the reduction of the contribution of migrant workers to family budgets. In general, these transfers are a
significant source of income for Ukrainian households. During 2019, the volume of remittances of migrants increased by 12.2% compared to the previous year and contributed to the growth of the average salary in Ukraine. However, in July 2020, the amount of remittances of migrants compared to July 2019 decreased by 13.5% [5]. According to the results of the study, it can be concluded that the situation with regard to the formation of household income has significantly deteriorated due to both quarantine measures and (to a greater extent) a decrease in the amount of remittances from migrant workers from abroad. As a result, consumption far outweighed savings, so it is necessary to further develop the development of household finances in the context of global economic processes.
Today, in order to form the preconditions for stabilization and economic growth in the country's economy, it is important to form savings and investment behavior. According to the results of the study [6], it was found that most respondents prefer traditional investment instruments, namely: deposits and real estate investments. At the same time, a significant proportion of respondents said they were ready to use new investment tools - "try to invest their
savings in business or start-ups, preferably in the field of innovation, alternative energy and IT." However, it should be noted that for Ukrainians the main criterion for investment is still low risks, because only a few of them are willing to risk their savings, without more or less good reason to believe that their investment will be successful.
However, as noted in the previous section, there is a problem in Ukraine with the limited choice of investment tools available and understandable to the public. As for alternative savings tools, they require special professional knowledge and are time consuming. Therefore, in Ukraine there is an urgent need for simple and flexible investment instruments with a low entry threshold (from 3 to 10 thousand US dollars), more or less predictable results and profitability, higher than the yield on foreign currency deposits.
Thus, in modern conditions it is advisable to diversify the approach to the choice of financial instruments for households to invest the saved resources, which will ensure the financial security of the population in conditions of economic instability. An important place in the process of stimulating the savings and investment behavior of households is occupied by knowledge of the specifics of the financial market and the ability to respond instantly to changes in the financial environment.
To this end, it is necessary to develop a set of effective mechanisms and tools for attracting savings of domestic households to investment processes, namely: development of a network of banking institutions, nonbank financial institutions: credit unions, private pension funds, collective investment institutions, etc.); expanding the list of financial services and products provided to private investors, as well as the production of new investment instruments, creating appropriate conditions for diversification of household investments); improvement of the current legislation on guaranteeing deposits of individuals taking into account the best foreign experience, as well as protection and support of competitive positions of domestic financial institutions; creating appropriate conditions for citizens to obtain the necessary knowledge about the main trends and features of the financial market, as well as available to the average investor sources of obtaining the necessary financial information) ".
We believe that to intensify the savings and investment behavior of Ukrainian households it is important to attract as alternative investment tools so-called quasi-savings, carrying out which households invest in certain tangible assets: real estate, precious stones and metals, works of art, antiques and other tangible objects. , cryptocurrencies, etc., which saves savings from depreciation or additional income.
Conclusions. According to the results of the study, it can be concluded that the financial behavior of households is a purposeful activity to attract and use
financial resources, which involves the choice of alternatives based on utility under the influence of psychological, social and economic factors.
The main directions of intensification of savings and investment behavior of households should be the following measures: providing conditions for the growth of household savings, including the formation of optimal policies for income growth and taxation; improvement of the regulatory framework for ensuring the guarantee of deposits of the population and the formation of an appropriate institutional framework; creation of an effective system of accumulation of long-term investment resources of households with the help of a wide range of financial instruments reliable for the average citizen.
In order to increase the level of financial literacy of Ukrainians, it is advisable to provide the following: create a state body to increase the level of financial literacy of the population, the functional purpose of which will be the formation of savings and investment culture; development and implementation of measures to increase the level of financial literacy of the population, in particular, programs for mastering basic skills in working with financial instruments, creating an interactive center for interaction with consumers of financial services, etc .; provide citizens with free consultations from independent financial development advisers personal finances and increased savings; to unite the efforts of the state, business and society in order to increase the financial education of the population, expand public access to investment instruments offered by the financial services market.
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